Expat warning: No deal Brexit could see pensions STOPPED, government warns

A NO deal Brexit could leave expats unable to access their pension income, the Government has warned.

The Treasury gave the warning in a technical paper setting out financial implications of a deal not being agreed with the European Union over Brexit.

Annuities - which people rely on for a regular pension income - are shown to be among financial products expats could struggle to claim.

The document said: “In the absence of action from the EU, EEA-based customers of UK firms currently passporting into the EEA, including UK citizens living in the European Economic Area, may lose the ability to access existing lending and deposit services, insurance contracts (such as life insurance contracts and annuities).

“For UK-based customers who access banking, insurance, investment funds and other financial services with European Economic Area firms currently passporting into the UK, temporary permissions will enable these firms to continue to provide these services to UK customers for up to three years after exit - allowing firms time to apply for authorisation to continue operating in the UK.”

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Concern Britons living in the European Union after Brexit could see their pension payments stopped was raised by influential House of Commons Treasury committee chair Nicky Morgan MP last year.

She threw her support behind industry calls for the issue to be addressed in Government Brexit talks.

Ms Morgan, who put the Treasury on alert in a letter to Chancellor Philip Hammond, said: “The possibility that UK providers may not be legally able to pay out pensions or insurance contracts to citizens in the EU – including UK expats – is a stark example of the consequences of a ‘cliff edge’ Brexit.”

Hugh Savill, director of regulation at the Association of British Insurers, said: “Leaving the EU without a deal would cause major inconvenience to millions of pensioners, travellers and drivers. We urge the Government to agree a deal as a matter of urgency.

Pensions could be lost to expats after Brexit (Image: GETTY)

Nicky Morgan warned about the impact of Brexit on expats' pensions (Image: GETTY)

“Obviously insurers want to meet their commitments to their customers, but this problem has the potential to affect millions of insurance customers, including UK pensioners overseas.

“It can be fixed by co-operation between the UK and EU regulators – if the EU authorities wish to do so. Insurers have of course been making contingency plans for their own operations for many months now, but this contract issue is not one that insurers themselves can fix.”

Brexit minister Dominic Raab played down the threat that thousands of British retirees i- many living in Spain - could lose out on pensions.

He said: “It’s hardly in the interests of southern Spain to do harm to the UK pensioners out there.”

The Government said it was committed to enabling a “general transitional tool” to phase in changes easing the impact if no deal is agreed.